Sold our house - using the cash for retirement; thoughts please

canalman

We've just sold our house and the money we getting will be the major part of our retirement fund as we are both on the brink of retirement age and have already stopped working.
Hopefully we'll net about £500k+ and, as we will be living on our boat at least for a while, we need to invest this cash wisely to keep the capital safe, generate a modest income etc.
Any (sensible) suggestions welcome: should we use some for a buy-to-let, stick it all in safe high-interest accounts or what?

Lokolo

http://www.nsandi.com/products/ib

That's one suggestion.

Another one is investing it, but I am not going to say anything about that as you'd have to go and see a specialist.

dunstonh

should we use some for a buy-to-let, stick it all in safe high-interest accounts or what?

you need to nail down your risk more. You say keep the capital safe but then list buy to let which suggests you dont mind low liquidity and some risk.

When you say safe, do you mean from investment risk, shortfall risk or inflation risk?

canalman

dunstonh wrote: »

you need to nail down your risk more. You say keep the capital safe but then list buy to let which suggests you dont mind low liquidity and some risk.

When you say safe, do you mean from investment risk, shortfall risk or inflation risk?

I'm already getting baffled which is why I need to ask a forum like this. Over the years I've paid into personal pensions which are now barely worth what I put into them; I've invested in shares based ISAs which have done the same and hence I'm very cagey about future investment.
I'm looking for modest income and protecting the capital against collapsing because of share slumps etc. I'm happy that some is tied up longer term (maybe in a buy-to-let) but obviously some needs to be more accessible for everyday needs.
Do I just dump it in a series of highest interest savings accounts and shuffle it around constantly to get the best rates or is there something cleverer than this?

Batchy

If you would have put it in an equities fund 12 months ago, it would have grown at least 50-65% in 12 months.

you could have lived off the 250k for a while, while you looked for some growth in the 500k. however you missed that boat.

Best thing to do is speak to a financial advisor, who will see what is available.

Personally i'd live in a nice park home, then for the 1-3 months your not allowed there, I'd go holidaying!

same idea as the boat, but you would have more space.

Good luck... PS im jealous, id love to be in your shoes I think your very lucky.

PS how old are you? ish? (correction... brink of retirement age) sorry

dunstonh

I'm already getting baffled which is why I need to ask a forum like this. Over the years I've paid into personal pensions which are now barely worth what I put into them; I've invested in shares based ISAs which have done the same and hence I'm very cagey about future investment.

Personal pensions and ISAs dont make money or lose money. They are just tax wrappers. Containers for your investments. The investments you place inside of them make/lose money. Investments vary in risk across a sliding scale. Its not a case of risk or no risk.

I have never known anyone have less than they have paid in after a long period unless its being valued at the bottom of a crash or they picked stupid investments (100% tech back in the late 90s for example).

I'm looking for modest income and protecting the capital against collapsing because of share slumps etc.

You need to be thinking about inflation as well. If you draw the income then in 10 years time, that £500k will be worth about £325,000 in spending power (and the income you draw will be lower as well).

Do I just dump it in a series of highest interest savings accounts and shuffle it around constantly to get the best rates or is there something cleverer than this?

You are focusing on extremes. i.e. 100% in cash then jumping up the risk scale to shares or buy to let. You are ignoring everything in between and the general rule that you dont put all your eggs in one basket but that you spread it around.

apt

If you are going to need a house eventually the best thing would be to buy somewhere you would be happy to live in eventually and which could be rented out in the meantime. Of course you would lose out financially if house prices crash, but that's likely to happen than the stock market falling after a strong rise, or inflation eroding the value of your cash savings. But if you are on the brink of retirement best not to put it all in one pot, be it property, cash or stocks and shares.

redpete

canalman wrote: »

... Over the years I've paid into personal pensions which are now barely worth what I put into them; I've invested in shares based ISAs which have done the same and hence I'm very cagey about future investment.

...I'm happy that some is tied up longer term (maybe in a buy-to-let)

Have you compared the change in property prices with the change in share prices over the last 1, 3, 10 years? You are considering investing in a single property which gives much less protection than spreading share investments across different industries and different geographical areas.

As others have suggested, spreading the risk is definitely worth considering, some in easy-access cash savings, some in longer term cash savings, some in a spread of shares investments (probably via managed or tracker funds), some in property...

DiggerUK

canalman,
I hate you, but only because you are retired.
You just need to do some simple sums and balance the books between the expenditure shortfall and income from pensions etc.

Then keep 6 months rainy day, say in Premium Bonds or *Cash ISA.
Put draw down money in *Cash ISA's for you to live on.
Anything you don't need for 3+ years to be put in NSI Index Linked, anything longer then put it in gold.

*Problem is, that as things stand, you are barely matching inflation with current savings interest rates. But what is the alternative other than risking it in ways that have already penalised you.

Best of fortune.

Jake'sGran

You could invest in ISAs for both of you, the ones where interest can be paid monthly. The best seem to be fixed rates over 5 years. I would also invest in Equity Income funds and if you don't need it yet let the income accumulate.
There are blue chip shares paying high dividends - like BP and and Shell.

I like Fidelity and they have a popular income fund; M&G too and both have excellent reputations. Have a look at websites like Trustnet and Morningstar. The FT site gives a lot of nformation about shares. It's important to spread it around.

amcluesent

>as we will be living on our boat at least for a while<

Suggests you'll want to purchase a property again in the future. As a hedge against being priced out if there is a large rise in house prices (i.e. if inflation takes off) you should take out a spread-bet on the house price index. As this is geared, it's a far better option for a hedge then buying a BTL.

I'd suggest your portfolio be something like -

25% in best online savings account/best online cash ISA (3% ish)
20% in a hi yield investment trust of miners, oilers etc.
20% in investment grade corp bonds
6% in NS&I index linked 3yr (17th and 18th issue)
5% in bullion gold vaulted outside of the EU
5% in Premium Bonds
4% in Zopa
2.5% in Canadian General Investment Ltd
2.5% in a BRIC investment trust